Contingencies

Loss Contingencies

• Remote
• Do NOT disclose
• Do NOT accrue 
• Reasonably Possible 
• Do disclose
• Do NOT accrue
• Probable
• NOT Estimable:
• Do disclose
• Do NOT accrue 
• Estimable:
• Do disclose
• Do accrue 

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Gain Contingencies

DO NOT ACCRUE until realized (occurred)

Calculation of Impairment Loss

GAAP 

• Step 1: (Undiscounted Future Net CF or Fair Value of Reporting Unit) less <Net Carrying Value>
• Positive: ok 
• Negative: IMPAIRMENT --> Step 2
• Step 2: 
• (FV/PV future net CF) less <Net Carrying Value>
• FV of underlying assets less FV of the reporting unit (goodwill)

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IFRS

(Recoverable Amount) less <Carrying Value> = OK/ <impairment>

• Recoverable Amount is greater of: 
• FV - Cost to sell = NRV
• PV of future CF

Statement of Cash Flows Overview

1. Operating Cash Flows
1. Transactions reported on the income statement
2. CA
3. CL
2. Investing Cash Flows
1. NCA (non-current assets)
3. Financing Cash Flows 
1. Debt (NCL)
2. Equity

Convert Cash Basis to Accrual Basis

1. Add increases in CA
2. Subtract decreases in CA
3. Add decreases in CL
4. Subtract increases in CL

Fund Categories

• Governmental (modified accrual) - current financial resources 
• General - day to day operations
• Special revenue
• Capital projects
• Debt service
• Permanent - principal required to be retained & invested
• Proprietary (accrual) - economic resources
• Internal service - only serves other funds
• Enterprise - serves public - user fee 
• Fiduciary (accrual) - economic resources
• Pension trust
• Investment trust
• Private purpose trust
• Agency

NPO 3 Basic FS

1. Statement of Financial Position
2. Statement of Activities
3. Statement of Cash Flows 

Government Entity General Purpose FS

Comprehensive Annual Financial Report (CAFR)

1. Management discussion & analysis (MD&A)
2. Government-wide financial statements
1. Statement of Net Position (BS)
2. Statement of activities 
3. Fund financial statements
1. Governmental funds (modified accrual)
1. BS
2. Statement of revenues, expenditures, and changes in fund balances
2. Proprietary funds (accrual)
1. Statement of net position (BS)
2. Statement of revenues, expenses, and changes in fund net position
3. Statement of CF
3. Fiduciary funds (accrual)
1. Statement of fiduciary net position
2. Statement of changes in fiduciary net position
4. Notes to the financial statements
5. Required supplementary information (RSI) other than MD&A
1. Budgetary comparison schedules
2. Information about infrastructure assets 
3. Claims development information when the government sponsors a public entity risk pool
4. Pension schedules 

If governmental merger > add merged carrying value.
If governmental acquisition > add acquired acquisition value (market-based entry price).

Capital Assets

Capital assets
- property held by tax payer
- NOT USED FOR BUSINESS

Non capital assets (used for business)
- inventory
- held for sale to customers
- depreciable personal property & real estate used in trade (section 1231, 1245, 1250)
- A/R and N/R from sales
- Treasury stock

Section 1231
- personal & real property
- buildings, machinery, land, timber and other natural resources, unharvested crops, cattle, livestock and leaseholds that are at least a year old.

Gains & losses are netted against each other in the same manner as capital gains and losses, except:

• net section 1231 gain is considered a capital gain;
• net section 1231 loss is classified as an ordinary loss

Section 1245
- personal property (i.e. machinery & equipment)

Section 1250
- real property (fixed property - i.e. land & everything permanently attached to it)

Section 179 deduction
2015 Deduction Limit = $25,000
This deduction is good on new and used equipment, as well as off-the-shelf software. This limit is only good for 2015, and the equipment must be financed/purchased and put into service by the end of the day, 12/31/2015.

2015 Spending Cap on equipment purchases = $200,000
This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis.
This spending cap makes Section 179 a true "small business tax incentive".